What is the New York Futures Exchange (NYFE)
The New York Futures Exchange (NYFE) was an exchange established for the trading of futures contracts of financial products. Futures which trade on the NYFE include index futures, currencies, and U.S. Treasury bonds. Instituted in 1980, as a subsidiary of the New York Stock Exchange, it has sold or merged several times over its lifetime. Many of the contracts it introduced now trade on the Intercontinental Exchange (ICE).
BREAKING DOWN New York Futures Exchange (NYFE)
The New York Futures Exchange (NYFE) came about due to the growth in the volume of trading futures contracts for non-physical commodities. Before the New York Futures Exchange, futures contracts for trading stock indices, currencies, and government bonds did not exist.
As interest grew in trading contracts such as these, the New York Stock Exchange established the NYFE. Trading began with U.S. Treasury bond futures and stock index futures which had a basis on the NYSE Composite Index.
Growth in Trading Financial Futures
Although futures contracts, mainly for agricultural products, have been traded since the 19th century, the increase in trading of futures and options based on financial indices and derivatives has outpaced those for physical products. Interest in trading currency futures grew as the Bretton Woods Agreement became less relevant with more currencies floating freely against others.
Due to severe inflation in the 1970s, financial professionals sought tools such as bond futures contracts to hedge against interest rate risk. Over time, the introduction of market indexes grew in the U.S. and globally. Investors began to adopt indexing strategies, sometimes using futures contracts to follow the performance of these indices. In addition, the popularity of derivatives grew. These options were not only on individual stocks but also on indices, currencies and futures contracts.
Established initially as a small subsidiary of the New York Stock Exchange in 1980, the New York Futures Exchange (NYFE) has grown into a business that helps investors and traders worldwide take advantage of hedging strategies across global markets.
Changes in Ownership of the New York Futures Exchange
During the early 1980s, NYFE introduced futures contracts on more specialized indices, such as the NYSE Small Composite Index. Trading in options on various futures contracts was added. Then, in 1994, the New York Cotton Exchange (NYCE) bought NYFE.
Four years later, the NY Cotton Exchange merged with the Coffee, Sugar and Cocoa Exchange (CSCE) to become the New York Board of Trade (NYBOT). Contracts that NYFE had introduced began trading on that exchange.
In 2007, the Intercontinental Exchange (ICE) acquired the New York Board of Trade. At this time, the futures contracts name changed to ICE Futures.